The cost of the Biden administration’s student loan bailout could exceed USD 1 tn. The plan will also complicate the government’s efforts to reduce the budget deficit, The Wall Street Journal said, citing a new analysis by the Penn Wharton Budget Model.
In late August, President Biden announced a plan to cancel USD 10,000-20,000 in student loan debt that would include millions of borrowers, with an official price tag yet to be unveiled. The White House has so far put forward the only estimate, implying that the 10-year cost of forgiving loans could total USD 240 bn, if 75% of eligible borrowers, a standard figure for such programs, take part, according to WSJ.
However, the Penn Wharton Budget Model’s team said the participation rate could be much higher depending on the application process. US outstanding education loans currently total USD 1.7 tn.
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